ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

General

The following information should be read in conjunction with the Consolidated Audited Financial Statements and Notes thereto and other information set forth in this report.

Forward-Looking Statements

Statements contained in this Form 10-Q that are not historical fact are "forward looking statements". These statements can often be identified by the use of forward-looking terminology such as "estimate", "project", "believe", "expect", "may", "will", "should", "intends", or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. We wish to caution the reader that these forward-looking statements, contained in this Form 10-Q regarding matters that are not historical facts, are only predictions. No assurance can be given that plans for the future will be consummated or that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these plans and projections and other forward-looking statements are based upon a variety of assumptions, which we consider reasonable, but which nevertheless may not be realized. Because of the number and range of the assumptions underlying our projections and forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond our reasonable control, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this Form 10-Q. Therefore, our actual experience and results achieved during the period covered by any particular projections or forward-looking statements may differ substantially from those projected. Consequently, the inclusion of projections and other forward- looking statements should not be regarded as a representation by us or any other person that these plans will be consummated or that estimates and projections will be realized, and actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate. The Company does not undertake any obligation to update or revise any forward-looking statement made by it or on its behalf, whether as a result of new information, future events or otherwise.

Overview

We are a healthcare technology company that provides Electronic Data Capture ("EDC") solutions and related value-added services to pharmaceutical and biotechnology companies, Clinical Research Organizations ("CRO"), and other clinical trial sponsors via our Web-based software, TrialMaster. TrialMaster allows clinical trial sponsors and investigative sites to securely collect, validate, transmit, and analyze clinical study data including patient histories, patient dosing, adverse events, and other clinical trial information. All of our personnel are involved in the development and marketing of TrialMaster and its related products.

During fiscal 2008, the Company has continued its efforts in executing its strategy. The primary focus of our strategy includes:

• Stimulating demand by providing clinical trial Sponsors with high value EDC;

• Expanding our business model by offering our software solution, TrialMaster, on a licensed and enterprise-wide, hosted services basis in addition to our existing hosted-services solutions which have historically been deployed on a project-by-project basis;

• Providing EDC services to small and midsize Pharma, Bio-Tech, Medical Device Companies and CROs (Clinical Research Organizations); and

• Differentiation through service.

According to a 2008 PriceWaterhouseCoopers report, global R & D expenditures by the pharmaceutical and BioTech industries were approximately $102.6 billion in 2006, with approximately 53% of that amount spent by North American-based pharmaceutical,

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biotechnology and medical device companies. Based on a 2002 CenterWatch report approximately 8.5% of total R & D costs are spent on data management. An April 2007 report by Health Industry Insights states that by the end of 2007, an estimated 45% of all new Phase I-III studies were initiated using EDC. The report also states that the total addressable market for EDC and eClinical services is expected to grow from approximately $600MM currently to $1.8B in 2010. Our operating focus is first to increase our sales and marketing capabilities and penetration rate and secondly, to continue developing and improving TrialMaster to ensure our services and products remain an attractive, high-value EDC choice. During the fourth quarter of 2008 and during fiscal 2009 we anticipate increasing our marketing and sales personnel by an additional two full-time equivalent personnel ("FTE") and will look to aggressively expand the scope of our CRO Preferred Program through a direct sales and marketing campaign aimed at increasing CRO awareness in order to increase our penetration of the domestic CRO market. During the second half of fiscal 2007 we established an operation in Germany under a wholly-owned subsidiary. During the second half of 2008 we have attempted to increase our overall marketing and sales presence in Europe through a more concerted direct sales effort on the part of our sales and marketing team and through an increased presence in European based trade shows as part of our strategic plan.

Our ability to compete within the EDC industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through TrialMaster. Our R & D efforts are focused on developing new, complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. During the nine months ended September 30, 2008 we spent approximately $664,000 on R & D activities, this is in addition to $917,000 and $742,000 we spent during fiscal 2007 and 2006, respectively, the majority of which represented salaries to our developers which includes the costs associated with customization of the TrialMaster software for our client's projects.

The nine-months ended September 30, 2008 compared with the nine-months ended September 30, 2007

Results of Operations

A summarized version of our results of operations for the nine-month periods ended September 30, 2008 and September 30, 2007 is included in the table below.